The White House’s Legislative Outline for Rebuilding Infrastructure in America

On Monday, the Trump administration finally released its highly anticipated “Legislative Outline for Rebuilding Infrastructure in America,” a 53-page document highlighting the White House’s core principles for rebuilding and revitalizing the nation’s aging infrastructure.

What’s In It

The president’s stated goal presented in the legislative outline is to stimulate at least $1.5 trillion in new investment over the next 10 years, shorten the process for approving projects to two years or less, address unmet rural infrastructure needs, empower state and local authorities, and “train the American workforce of the future.”

The plan addresses more than traditional infrastructure, like roads, bridges, and airports — it also addresses other needs like drinking and wastewater systems, waterways, water resources, energy, rural infrastructure, public lands, veterans’ hospitals, and Brownfield and Superfund sites.

As expected, the White House proposal included:

$100 billion that would be competitively allocated to state and local governments, prioritizing those who already have existing cash flow;

$50 billion in block grants and competitive grants to states for rural projects;

$20 billion for “transformative” projects, such as high-speed rail; and

$10 billion for a “capital financing fund.”

The proposal does provide some greater detail on various aspects of how the funding would be administered, distributed, and would work with some existing programs. For example, the proposal calls for an expansion and increased funding for government financing programs that provide loans and loan guarantees for transportation and rail infrastructure, as well as water and wastewater. At the same time, it broadens eligibility, streamlines federal funding, and also lessons federal oversight. Additionally, it expands eligibility for who can apply and what types of projects can be funded under these programs, while calling for a shift of some oversight responsibilities to states.

Following this general approach, the proposal also calls for expanded eligibility for the use of Private Activity Bonds (PAB) — tax-exempt bonds issued for projects that serve the public good that are built with private funds. President Trump’s proposal would allow longer-term private leases and concession arrangements for projects financed with PABs and allow broader categories of public-purpose infrastructure projects, including restoration projects, to take advantage of these tax-exempt bonds — with the goal of encouraging more private investment. The proposal does still maintain the existing categories for PABs, with some modifications, including new categories regarding the ability to finance environmental remediation costs on Brownfield and Superfund sites, as well as rural broadband service facilities.

In creating greater flexibility and broadening eligibility for the use of PABs, the proposal makes clear that several of these changes are aimed at directly driving private investment, such as through the allowance of new tolling on federal interstates and the privatization of interstate rest areas.

The proposal also provides more details on how the administration plans to streamline and improve the permitting process for infrastructure projects. The administration plans to do this through a three-prong approach that would: create a new, expedited structure for environmental reviews; delegate more decision-making to states and enhance coordination between state and federal reviews; and authorize pilot programs through which agencies may experiment with innovative approaches to environmental reviews while enhancing environmental protections.

For example, it establishes a “One Agency, One Decision” environmental review structure — giving lead agencies 21 months to complete an environmental review and an additional three months to make decisions with respect to necessary permits, as opposed to project sponsors having to navigate the permitting processes with multiple federal agencies with separate decision making authority.

Additional aspects include a core focus on eliminating redundancies, cutting cost, and allowing certain aspects of a project, like utility relocation, to proceed while awaiting additional permit approval.

What’s Not

What’s not in the proposal is a way to pay for it. The funding mechanism is not identified.

The administration did release an FY 2019 budget request the same day that makes direct and passing reference to cuts in existing programs throughout the government where potential savings could be used to finance infrastructure investment. Many of these cuts are to agencies that would be tasked with overseeing infrastructure priorities, but overall there is no clear explanation of where and how these cuts would raise $200 billion over 10 years for infrastructure investments. The only thing that has been said is that the $200 billion would come from savings in existing programs. However that vision is not expressed in the infrastructure proposal or the budget request.

It’s being reported, however, that President Trump, in a bipartisan meeting with legislators on Wednesday, did call for a $.25 gas and diesel tax increase to help pay for his proposed infrastructure plan. The U.S. Chamber of Commerce, which has been vocal in support of raising the gas tax to help pay for infrastructure improvements, was quick to come out with a statement from Chamber President Tom Donohue thanking President Trump for his endorsement of the slight gas tax hike. The current gas tax, set at 18.4 cents per gallon, was last raised in 1993.

This isn’t the first time Trump has proposed increasing the tax. In December, Trump reportedly suggested a $.50 per gallon increase during a meeting with retiring House Transportation Committee Chairman Bill Shuster (R-Pa.). For Republicans up for reelection this year, raising the tax may be a tough pill to swallow, and the idea has faced heavy Republican pushback. In January, Senate Majority Whip John Cornyn (R-Texas) told The Washington Post, when asked about talk that Trump had proposed a gas tax during meetings at Camp David, “I’m sure it came up in some context because that’s what a lot of people have proposed at different times. But I have complete confidence that we will not be raising the gas tax.” Even Trump’s advisers have been quick to note that increasing the gas tax is not the preferred option for raising infrastructure funding. Transportation Secretary Elaine Chao told CNN Wednesday after these reports surfaced that, "The president has not declared anything out of bounds, so everything is on the table. The gas tax, like many of the other pay-fors that are being discussed, is not ideal … The gas tax has adverse impact, a very regressive impact, on the most vulnerable within our society; those who depend on jobs, who are hourly workers.”

Another critical component missing, both in the administration’s infrastructure proposal and in the budget, is how to address current infrastructure programs. The proposal seems incomplete in that it does not lay out a clear vision on how to deal with existing infrastructure programs by either elimination or modification, how to address shortfalls in current funding for maintenance and repair of crumbling infrastructure, or how to keep current trust funds that fund much of the infrastructure today solvent going forward. This lack of a clear vision that reconciles current programs and funding is a huge gap that will shape much of the debate as Congress begins to consider the president’s proposal.

What’s Surprising

The administration's infrastructure proposal contains several measures aimed at workforce development. It calls for reforming career and technical education, expanding Pell Grants, and tweaking the federal work study program, all of which would “ensure our country has enough skilled workers to perform not only existing work but also fill the new jobs created by the bill,” according to the text of the proposal. It’s notable that the specific reforms mentioned in many cases would support education and training beyond just rebuilding the nation’s infrastructure.

Additionally, there is specific mention in the proposal that rural areas would get $50 billion, part of which the president has said should go to expanding rural broadband. Specifically, the president’s plan recommends that Congress amend the National Environmental Policy Act and the National Historic Preservation Act so that the deployment of small cell equipment necessary for 5G networks would be exempt from certain environmental and historic preservation review procedures that are currently in place. However, the outline did not specify whether any funds would be set aside specifically for rural broadband or 5G deployments. President Trump told state and local government officials during a meeting after the plan’s release that broadband access needs to be a key component, saying the plan provides $50 billion for rural folks who have been “left out.”

What’s Next

It’s important to note that this proposal is simply a proposed framework. Congress has begun to examine these broad principles and will, after hearing from various stakeholders, work to translate them into legislation. However, in order to pass in the Senate, any legislation will need to be bipartisan in nature in order to receive 60 votes.

The first announced chance to hear more on the administration’s proposal and from members of Congress will come on March 1 at a Senate Environment and Public Works Committee hearing, where Secretary of Transportation Elaine Chao will go through the legislative outline in greater detail. While that may be the first step in the process, no less than 11 congressional committees and their subcommittees are likely to weigh in as discussions on the proposal move forward.

If you have any questions about the topics discussed in this Alert or how they may apply to your business, please contact a member of Cozen O'Connor Public Strategies.